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TMI Blog2021 (1) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... to the same provisions under the UPGST Act, 2017. Brief Facts of the Case 1) M/s Uttar Pradesh Power Corporation Limited, Shakti Bhawan, 14, Ashok Marg, Lucknow, Uttar Pradesh - 226020 (the Appellant) is a registered assessee under GST having GSTN: 09AAACU5088M4ZM. 2) The Appellant is a State Government undertaking mainly entrusted with the responsibility of purchase and supply of electricity to the distribution utilities. The Appellant is the holding company of five distribution companies in the State of Uttar Pradesh, namely, MVVNL, DVVNL, PVVNL, PuVVNL and Kesco (collectively referred to as "DISCOMs"). The DISCOMs are 100% subsidiaries of the Appellant. The Appellant purchases power in bulk from various sources centrally including thermal, hydro, nuclear, solar, CNEC, electrical trade, power exchange, power banking, etc. and makes bulk supply to DISCOMs for onward supply / distribution to the ultimate consumers. 3). A Memorandum of Understanding was entered into between the Appellant and the DISCOMs, wherein it was agreed that as the Appellant is functioning on 'no profit and no loss basis', the total power procurement cost will be passed on by the Appellant to DISCOMs in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 36 of the CGST Rules. 6) Being aggrieved with the Order No. UP ADRG-64/2020 dated 17.09.2020, the Appellant filed this appeal application before us. Grounds of appeal submitted by the Appellant:- 7) The Appellant made the following submissions: 7.1) The Hon'ble AAR has failed to examine all submissions made in the application filed by the Appellant and to provide the reasons as to how the submissions made are not applicable to the facts of the Appellant. 7.2) As per the provisions of UPERA, the Appellant is entrusted with the responsibility of procurement, transmission and supply of electricity and to undertake planning and coordination in regard to transmission. 7:3) The Appellant makes bulk purchase of electricity from various power stations for which it has entered into Power Purchase Agreements. The Appellant draws the electricity as per the contracted capacity from such power stations and makes the payment of electricity charges as determined by Central Electricity Regulatory Commission. 7.4) The Appellant procures and supply electricity to DISCOMs at 'no profit and no loss basis'. The direct cost incurred by the Appellant in purchase of electricity was passed on to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power allocated to DISCOMs is a mere adjustment in its books of accounts and is not recovered for provision of any service. There is no agreement between the Appellant and DISCOMs giving rise to an obligation of performance of an activity for DISCOMs in lieu of any consideration. In such a case, the Appellant does not supply any service to DISCOMs. 7.9) Without prejudice to above and assuming without admitting that the subject expenses are for different supplies made by the Appellant, such supplies are naturally bundled with and supplied in conjunction with supply of electricity, with principle supply being that of electricity. 7.10) In the instant case, the alleged activities undertaken against the subject expenses are part and parcel of the process undertaken by the Appellant for supply of electricity to the DISCOMs. The only business of the Appellant, as discussed, is supply of electricity to the DISCOMs and it is in the course of such business, that the Appellant undertakes the alleged activities against the subject expenses. 7.11) Without prejudice to above, and assuming without admitting that GST is payable on the subject amounts, it is submitted that the Appellant is elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng carried out the Appellant such as providing training to the employees of DISCOMs, making arrangement for cashless treatment facility for DISCOMs employees, recovering employee cost that are performing finance, audit related work of DISCOMs etc. Further, as per Schedule III of the COST Act, 2017, "Services by an employee to the employer in the course of or in relation to his employment shall be treated neither as a supply of goods nor a supply of service". As per Section 2F of the Employee's Provident Fund and Miscellaneous Provisions Act, 1952, the term "employee" has been defined as "Any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment, and who gets his wages directly or indirectly from the employer" . In this regard I observe that the Appellant and the DISCOMs are two separate business entities and employee of Appellant cannot be treated as employees of DISCOMs. Accordingly, any activity performed by the Appellant for employees of DISCOMs or any activity performed by the employees of the Appellant for DISCOMs cannot be classified under "employer-employee relationship". Further as per the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserve that the said judgment has been challenged by the department in the Hon'ble Supreme Court of India and decision in the matter is pending there. 10.6) In view of this I upheld the Advance Ruling Order No. UP ADRG-64/2020 dated 17.09.2020 issued by the Advance Ruling Authority of Uttar Pradesh. 11) Further, the views of the Member (SGST) are as under:- 11.1) I observe that as per the Appellant they purchases electricity from the generating companies under the Power Purchase Agreements and sells further to the DISCOMs. It has been agreed between the Appellant and DISCOMs that the total power procurement cost of the Appellant shall be passed on to the DISCOMs. It includes the direct cost incurred by the Appellant, as paid to generating companies, and other costs incurred by it in the form of subject expenses. Further as per the Memorandum of Understanding dated 20.05.2016 entered into between the Appellant and the DISCOMs, it has been agreed that as the Appellant is functioning on 'no profit and no loss basis', the total power procurement cost will be passed on by the Appellant to DISCOMs in ratio of their drawl. From the above I am of the opinion that the entire arrangement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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